The Reform Imperative: Eastern Enlargement, Trade and the Environment

Abstract

Although the MacSharry reforms represent the first real progress towards significant revision of the CAP since its inception, the policy remains substantially unreformed. More than half of the total OECD transfer of resources to agriculture in 1994 occurred in the EU, estimated at some $80 billion. While subsidy levels in other countries, such as the United States, have fallen slightly, the Producer Subsidy Equivalent (PSE) in the EU has continued to rise. The percentage PSE is now five times the level in Australia (see Table 7.1). The OECD’s 1996 report on agricultural policies noted that in 1995 the European Union was paying out an average subsidy of $21,000 to every full-time farmer in the EU: ‘Despite CAP reform and the Uruguay Round, this figure represents a 75% increase on the $12,000 average for the years 1986–88 for the EU-12’ (Agra Europe, 31 May 1996, p. P/1).